By the 1980s, it was recognised that our growth strategy, of centralised planning with a dominant role for the public sector, was not able to fulfill national aspirations. The growth rate was low, with high inefficiencies and low productivity. It was the severe balance of payments crisis in 1991, caused by debt build-up and inability of government to remove growth constraints, that triggered more fundamental reforms.
The main elements were liberalising the economy and making it more market-driven, removing barriers to trade, foreign investment and technology, reducing the state sector’s dominance and reforms to increase efficiency and remove barriers to growth. The pace and sequencing were halting and gradual, reflecting the interplay of economic and political forces. While the relatively low-hanging fruit has been plucked, the more difficult areas remain. External liberalisation was gradual and is still on; subsidy reduction and civil service reforms remain politically difficult. Reform of public sector enterprises and reducing their dominance is another example of gradualism. Consensus is elusive. Except briefly, privatisation has been halting; now, it has perhaps stopped. The signal for market-based reforms is worrisome.
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